Solution
Looking at the information provided, we need to find T's deficiency in profits.
Calculating Interest on Capital:
Interest for A = 3,00,000 × 5% = Rs. 15,000
Interest for V = 3,00,000 × 5% = Rs. 15,000
Interest for T = 2,00,000 × 5% = Rs. 10,000
Total Interest on Capital = Rs. 40,000
Adjusting for A's Fee Shortfall:
A guaranteed minimum fee of Rs. 6,00,000 but earned only Rs. 3,20,000
Shortfall = 6,00,000 - 3,20,000 = Rs. 2,80,000
This shortfall will be debited to A's account, meaning the net profit needs to be adjusted by adding back this shortfall to understand the actual distributable profit.
Adjusted Profit = 8,60,000 + 2,80,000 = Rs. 11,40,000
Profit Available for Distribution:
Profit available for distribution = 11,40,000 - 40,000 (Interest on Capital) = Rs. 11,00,000
T's Share of Profit:
Profit sharing ratio is 5:3:2 (Total = 10)
T's share = 11,00,000 × = Rs. 2,20,000
T's Deficiency:
T is guaranteed a profit of Rs. 2,50,000 (excluding interest on capital)
T's actual share = Rs. 2,20,000
Deficiency = 2,50,000 - 2,20,000 = Rs. 30,000
This deficiency of Rs. 30,000 will be borne by A and V in the ratio 2:3 as per the partnership deed.
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